Parasol - Employment Costs - extra charges??

[DeductiveShark]

I've been with Parasol for about 6+ years and have always been quite happy, and it was only today after going through my payslip and noticing these 'Employment Costs', that I got suspicious and decided to do a bit of digging...........I'm glad I did, and I'm glad this has already been addressed and explained (to some degree anyway!)

The time has come to go Ltd, however I want to make sure that I am reimbursed with any moneys that Parasol have taken from me under so called 'Hidden Costs' - I'll be giving them a call tomorrow to query this and will report back how I get on. The way I see it is that they are taking money from me that I did not agree to - there is only one word for it; THEFT!

BTW, isn't it part of employment law that they must provide all employers with a payslip which includes a full breakdown of all deductions? Next thing you know, they'll be revamping their payslip again, labelling Tax and NI as 'Boring Stuff you don't need to know about' and trying to add a few extra quid on for each contractor! in the hope no-one notices!

[The Spartan]

I'm due a response from them soon so I'll let you know how I get on after all they were overcharging me for 3 months

[LisaContractorUmbrella]

Hi Everyone,

I think this recent piece by Professional Passport gives some good information on this issue. Worth a read:

http://www.danbro.co.uk/assets/agenc...223cf92eb1.pdf

Danbro

I think the article explains what the contractors on this forum had already worked out for themselves - I think the issue was more one of transparency rather than accounting principals

[Nixon Williams]

I think this recent piece by Professional Passport gives some good information on this issue. Worth a read:

http://www.danbro.co.uk/assets/agenc...223cf92eb1.pdf

Danbro

At Nixon Williams we do not operate an umbrella company but the calculations given do not seem right:

In this example the traditional method calculation of
employment costs would be:
1000 - 27.50 - 150 - 136 = 686.50

Employers National Insurance would apply to the £686.50 at
13.8% giving an actual cost of £94.74.

The post AWR increased cost calculation applied by some
umbrella providers would return:
1000 - 27.50 - 136 = 836.50

An employment cost of 13.8% would be applied to this giving
an actual cost of £115.44.

A difference of £20.70 per week.

On the first example I would have expected the employers NIC to be included within the £686.50 so that the employers NIC of 13.8% would be applied to £603.25 giving NIC of £83.25 (603.25 + 83.25 = 686.50).

On the second example the 13.8% NIC would be applied to £735.06 giving NIC of £101.44 (735.06+101.44=836.50).

So the 'difference' would be £18.19 not the £20.70 quoted.

The umbrella would be broke if it followed the example provided on the link as it would be paying out the following:

Expenses = £150
NIC free Pay = £136
NIC'able Pay = £686.50
Employers NIC = £94.74

Total = £1,067.24

Income £1,000 therefore a loss of £67.24!

I can see why some umbrella companies are attempting to increase their income, following AWR they will probably have increased costs, but it should be up front.

[The Spartan]

But in all this they should not be taking their employment costs (Employers NI and margin) before the expenses have been deducted?

[Danbro]

I think the article explains what the contractors on this forum had already worked out for themselves - I think the issue was more one of transparency rather than accounting principals

The difference being that this has been published from an independent body that specialise in compliance within the contractor market. A supporting document should they need it.

[LisaContractorUmbrella]

The difference being that this has been published from an independent body that specialise in compliance within the contractor market. A supporting document should they need it.

True, it has been published by an independent individual who conducts compliance reviews who does not confirm that the practise is correct but does confirm that the issue has nothing to do with compliance.

[seabro]

I have heard back personally from the MD. He confirmed that not everyone is charged more than the published figures, which by default confirms some are. At this point he has not told me how they decide who pays extra nor how they calculate the extra.

I have emailed back the same two questions and hoping for some transparency in his reply. I will update you when I hear from him.

[Wary]

I can see why some umbrella companies are attempting to increase their income, following AWR they will probably have increased costs, but it should be up front.

Indeed ... and any additional charges should also be applied consistently across the board.

[The Spartan]

I got the standard Parasol response:

The amount retained by Parasol is detailed in your contract of employment. Payroll costs include, but are not restricted to, any payment of Basic Pay, employment costs (such as employers national insurance contributions) and pension contributions as well as any business expenses reimbursed by the Company.



Clause 3.1 confirms that whilst on assignment, you will be entitled to be paid basic pay for the hours that you work. For clarity, basic pay is a sum per hour at the rate of National Minimum Wage in force from time to time and not including any advance payment of PBA or Commission. I have attached a copy of your contract of employment.



Employment costs consist of Employers' National Insurance Contributions (NIC) which is currently calculated at 13.8%, employers National Insurance has always been an amount retained and this amount is sent on to the HMRC. Any additional amount of Employment Cost retained can vary, depending on whether you have a pension or claim business expenses.



I can confirm that Parasol are fully compliant with legislation and have not taken any payments from you unlawfully. The employment costs are non reimbursable, therefore we are unable to refund these to you.